NFC: Looking Beyond the Point of Sale

In-store trials of Near Field Communication (NFC) technology are spreading like wildfire as offline retailers attempt to piggyback on the latest natural pairing of technology and tradition.

Crazes like showrooming - the practice of browsing for and testing products in-store before buying online - may have created their fair share of high street disgruntlement, but a number of stories have highlighted the positive impact that technology can have on brick-and-mortar businesses if given the chance. Take the iBeacon initiatives at over 4,000 Macy’s stores; the click-and-collect services we have grown to take for granted; and if recent investments from Sainsbury’s and Argos are anything to go by, it is that NFC could prove pretty useful in this space as well.

A typical NFC interaction involves the pairing of technology built into a mobile device, an iPhone 6 or otherwise, with an NFC-equipped chip, which is able to transmit or receive information based on the programmer’s agenda. On one hand, life hacks like instant mobile payment systems or virtual car keys could snip valuable minutes off the average Joe’s trip around town. On the other, relevant information displayed on devices interacting with a chip opens up a wealth of opportunities for intelligent and highly measurable forms of marketing.

Feeling the need to find out a little bit more about NFC and what it can offer stores beyond the payment terminals, PerformanceIN looked into one of the more interesting shop demos unfolding in London.

Part of the furniture

Standing tall as a two-century-old luxury furniture business, UK-based Heal’s has expanded out of its early bed-making roots and into retail, opening six physical stores along with an extremely well-presented e-commerce offering. If first thoughts were anything to go by you’d probably guess that a business dating back to 1810 would eschew any attempts to add to the existing on-site technology.

Heritage and tradition are two things the offline shopping world takes very seriously and it is painstakingly hard not to be amused by the actions of certain independent stores as they seek to drive out smartphone-fascinated customers, through viral-inducing signage or otherwise. But NFC’s proposition supplied a natural reason for Heal’s to embrace in-store technology, and a partnership with NFC provider CloudTags, added to Apple’s addition of NFC capability on the iPhone 6, has given the store and its competitors plenty of food for thought.

Forming part of the brains behind an in-store trial for the technology at Heal’s Tottenham Court Road location, CloudTags director and co-founder Ollie Bath believes NFC provides consumers with a seamless introduction to how technology can enhance their store visits, while shifting the focus away from the product and onto the experience.

“The idea is this is very much an education piece for everybody involved, including the consumer,” he says. “The presence of tablets at Heal’s flagship store is allowing customers to delve deep into the information available on products in-store through NFC link-up. One quick tap against a tag brings up a rich bank of information, ranging from in-depth product descriptions to images, videos and even recommendations on similar items.”

Operating in a space where buyers demand everything to fit in with what they already have going on at home, the recommendation feature provides a great opportunity for the upsell. There is also a separate tool which allows for the sending of products to the consumer’s inbox, ready for further inspection.

“Often the consumer doesn’t know how digital can complement their shopping experience, so what we’re doing is creating an easy way for a customer to get involved and show what can be done by not forcing them to have to log onto Wi-Fi, download an application, so they can literally just pick up a device and have a go,” says Bath.

Of course, every single interaction with a tag is counted and analysed for the retailer’s own spot of revision. NFC tracking allows for a deep dive into the traits of each consumer both during and after their visit. Heal’s ecommerce director, Oliver White, said the ability to measure and market to consumers was one of the main reasons for the trial taking place.

“That [measurement] was key from our perspective; that if we were going to invest in it [NFC] we were going to have utter visibility of A, the numbers of customers engaging with it, and B, that we could measure it beyond that, to see what commercial value it holds for us.

“That data is all available. We can see how many consumers pick up a device, how many consumers interact with products, the length of time they use the device for, the percentage of users that go onto email themselves a created list, and the engagement beyond that email. It’s all very transparent.”

In-store lead gen

A similar trial at MADE, an online furniture retailer which also placed tags next to products at its Notting Hill showroom for NFC interaction, saw a stellar response. Stats from CloudTags indicate that 21% of consumers opted to have their digital in-store collections sent to their email address and 41% went on to browse products on MADE’s e-commerce store. CloudTags insists that NFC attributed to a 15% increase in MADE’s average order value (AOV) while the trial took place.

So with instant lead generation and conversion benefits, both of which can be tracked, it seems NFC could prove a useful addition to the in-store marketing artillery. The technology can also be used to introduce customers to an offering they perhaps didn’t consider before entering the store.

“Retailers are seeing NFC as a great technology for customers to discover their mobile experience, whether downloading the retailer’s latest app or discovering personalised content through their mobile or tablet browser,” says Daniel Angel, director of mobile marketing firm Tamoco, which also specialises in connecting physical media to digital content through NFC.

“Retailers are most excited about the personalisation possibilities,” he continues. “For example, if you are a loyal, existing customer, you can try on a garment, decide you want it delivered to your home address and do this with a simple tap of a tag on the garment or shop display.”

There are few barriers to NFC implementation, according to Angel, as the tags themselves are low in cost and do not require power. Technology built into handsets such as the iPhone 6 and HTC One will transmit an electromagnetic field around the device, powering an antenna and data-equipped chip found inside an NFC tag, which typically sports the dimensions of a pin badge.

Angel adds that retailers can measure the demographic data of their visitors right down to the products and offers that have piqued their interest and the number of sales that have resulted from NFC engagement. The fact that NFC devices boast encryption and do not allow personal customer data to be accessed also provides peace of mind for the willing participants. Yet brands have still been hesitant to adopt the technology, and it is only now that NFC finds itself with a list of advocates to rely on.

A helping hand

One man unlikely to change his opinion of the technology is Lyndon Lee, who last year claimed that NFC “had passed its sell-by date” during his tenure as enterprise architect at supermarket giant Tesco. It may not be as cut and dry as this, though, in that Lee’s comments were made in reference to NFC’s potential for contactless payments, and high adoption for these systems across stores in the UK as well as Japan and South Korea may have already proved him wrong.

As recently as this month it was announced that Sainsbury’s, Asda and House of Fraser would be supporting customer payments via Zapp, the mobile application which allows NFC-enabled devices to make contactless payments across participating stores.

Meanwhile over in the US, Apple Pay is set to further popularise the idea of NFC for transactions by enabling customers with money loaded onto a ‘mobile wallet’ to scan their phones across point-of-sale terminals at participating Walgreens, Subway, McDonald's and CVS and - rather unsurprisingly - Apple stores. You might need a US credit card to make the connection; the early reviews of Apple Pay are something of a mixed bag; but in support from Tim Cook et al. there are at least signs that retailers around the world could take notice of a technology once tarnished as being outdated.

But as stores marvel over the potential of NFC for reducing conversion times, and app developers vye for business in a mobile payments market valued at $507 billion by Gartner, retailers would be wise to use this time to consider the ways in which the technology can benefit their in-store marketing. Moves from the likes of Apple and Zapp will ensure that NFC-enabled payment terminals will bring ‘tagging’ into the mainstream. Beyond this, there is certainly a highly measurable marketing opportunity for the taking, and it is there to be seized.

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Richard Towey

Richard is a former head of content at PerformanceIN. After many years spent covering developments from the automotive, sports, travel and finance sectors, he eventually turned his full attention to reporting on stories from the fast-evolving world of digital marketing.